Czechoslovak Group is able to prosper despite coronavirus epidemic and economic crisis

Info.cz

13. 07. 2020 • 10:58

While the part of the Czech economy concentrating on the automotive industry has got into a difficult situation as a result of the coronavirus epidemic and the related economic crisis, many Czech industrial companies are able to prosper even in the difficult conditions of 2020. As an example of that, we can talk about the Czechoslovak Group, a holding of companies with a turnover of around 30 billion crowns. The holding specializes in countercyclical fields of the industry with high added value: special land vehicles for the military and firefighters, brake systems for rail vehicles or radars.

Czechoslovak Group (CSG for short) is an industrial-technological group that operates mainly in the Czech Republic and Slovakia and employs over 8,000 people. Its founder is a Czech businessman Jaroslav Strnad, who started in the 1990s from scratch. His first business was trading in scrap iron, the source of which he discovered also in the unnecessary material and surplus equipment of the Czech Army. Over time, he found out that spare parts that could be extracted from useless technology and traded were of greater value than scrap.

Because the supply of redundant equipment was not endless, over time he had to acquire the ability to manufacture and repair military equipment. This required having a factory with employees. He, therefore, bought from a bankruptcy trustee a bankrupt military repair company in Přelouč and began to operate there. Gradually, overhauls and modernizations of old ground military equipment of Russian origin became an important business of the emerging Strnad group. It is a strategic industrial capability to have, as this ground technology is still in the arsenal of a number of NATO armies, and thanks to the domestic defence industry, the Alliance's militaries are not dependent on the original Eastern manufacturer.

A milestone in his business in 2013 came with the acquisition of the bankrupt Tatra automobile manufacturer in an execution auction. Jaroslav Strnad bought it together with a successful North Moravian businessman René Matera who is a minority partner in Tatra. The company of Tatra is without exaggeration a jewel of Czech industry with a continuous tradition of vehicle production in Kopřivnice lasting 170 years. It is one of the most important Czech brands both at home and abroad. Jaroslav Strnad thus moved into the first league of the Czech industry by succeeding in getting the Tatra company up on its feet and filling it with orders.

Strnad's emerging group of companies gradually expanded and included a company from the railway industry field (namely DAKO CZ, the manufacturer of brakes for rolling stock), then radar manufacturers (companies Retia and ELDIS in the city of Pardubice) or the only Czech watch manufacturer with the proprietary ELTON watch movement, owner of the PRIM brand. Like Tatra, some of these companies were in a crisis and Jaroslav Strnad and his managers managed to get them back on track.

Outside this category is the TDV company, the youngest arms manufacturer in the Czech Republic, which was set up in Kopřivnice in 2016. Its production program includes, among others, wheeled armoured personnel carriers Pandur, for the production of which the Strnad Group obtained a license from the European corporation General Dynamics European Land Systems. owned by a parent company in the USA. Thanks to this move, we managed to transfer to the Czech Republic the development and production of technology, which is the backbone of the Czech Army's ground forces and also represents export potential, as evidenced by the order to supply Pandurs from the Czech Republic to the Indonesian Army.

Another important project of CSG in the field of military technology is the six-wheeled TITUS armoured vehicle, a product of the joint development by the Tatra Kopřivnice and by the French state-owned company Nexter Systems. Based on a contract from 2019, its first user is the Army of the Czech Republic and negotiations are underway on its export to foreign customers.

In 2016, Jaroslav Strnad left the leadership of the Czechoslovak Group behind and began building a new industrial group, CE Industries, whose pillars are the railway and energy industries and recycling, but not the defence industry. The leadership baton in CSG was taken over by the son Michal as the owner and the CEO. Under his leadership, CSG continues to evolve into an industrial-technological group, which, in addition to ground technology, is significantly expanding in the field of aerospace. An important part of the business in this area is the unique Slovak Training Academy, which trains pilots and ground personnel for helicopter aviation at Košice Airport. This company has important partners in the USA and is the only private operator of UH-60 Black Hawk helicopters in Europe. As this overview shows, with regard to the defence industry, the CSG focuses on partnerships with Western companies from the NATO member states.

CSG does not ignore the existence of markets in Russia and China, but they do not play a significant role and are open only to civilian production. For geopolitical reasons, cooperation in the defence industry is excluded. On average, several dozen heavy commercial Tatra trucks are delivered to Russia every year, which testifies to the uniqueness of this vehicle. Otherwise, given the price and the existence of their domestic producer (KAMAZ), the Russians would not buy them. In China, there is a project for the licensed production of civilian Tatra trucks underway and ELDIS, the radar manufacturer, has supplied radars for civilian air traffic control there.

In the context of doing business in China, it is also necessary to perceive the local industrial policy, where Chinese manufacturers try to acquire know-how for each product supplied from abroad, start their own development and production and then replace their former suppliers in their domestic markets. This practice came to light fully during the coronavirus crisis as the banal case of protective face masks proved.

CSG companies are an important part of the European industry and operate in an environment where meeting demanding regulations – from employee protection to environmental measures – is emphasised. In the context of trade relations with China, it is therefore important for Europe to protect its own industry, which meets all the demanding regulatory requirements, so as not to disappear completely or become dependent on foreign suppliers, for whom the protection of workers' rights or the environment is not a priority.

SDÍLET